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Govt may bring ownership of coal blocks on par with other resources

In contrast when the government began handing out telecom spectrum or oil and gas acreage, it had to face no such problem.

Written by Subhomoy Bhattacharjee | New Delhi |
September 27, 2014 1:26:30 am

The government is working on an alternative to make the auction of the 214 coal blocks go through without needing a Parliament approval. The option is to vest the coal blocks, whose allocation has been declared illegal by the Supreme Court, with the President of India.

The option presented to the coal ministry will also allow the government to sidestep changes to the Coal Mines Nationalisation Act of 1973 and bring ownership of coal blocks on par with other natural resources of the country.

Suresh Prabhu, head of the Advisory Group for Integrated Development of Power, Coal and Renewable Energy set up by the government told The Indian Express that the plan is being considered by the government.

Under the Coal Mines Nationalisation Act, the ownership of all discovered and potential coal assets had been handed over to “Central government” by Parliament. In the definitions in the Act, however, it was stated that “all references to the central government shall be construed as references to the government company”.

This government company was christened as Coal Mines Authority Limited which in 1975 was notified as the current holding company — Coal India Limited.

Consequently, though the company is government-owned and therefore under the President, the rights to cede the usage of coal blocks, new or existing, has been interpreted to mean it can be exercised only through it. This provision was written in the 1970s since there was little experience in these matters with the then government and no indication that it may need to be relaxed in future. No exceptions were built in, consequently.

Keeping the 214 blocks with the President can be done through a notification, a source associated with the developments said. “These are early days and the plan would need to be vetted by the law ministry, but we intend to push it through,” a source involved with the developments, said. It will give the government the option to hold the auctions without having to amend the Nationalisation Act, first.

This would allow the coal blocks to be brought into auctions at regular intervals as the government may decide without requiring any approvals from Coal India, he added. On Wednesday the Supreme Court has held that all coal blocks allocated by the government since 1993 (except 4) were illegal and have to be terminated. It has given the government a six month period to work out the details.

Because of the blanket powers over coal mines in 1993 when the first lot of coal blocks was put up for auction, Coal India had to issue a letter to the coal ministry stating it had no intention to mine them and those may therefore be used by the coal ministry in any other way.

In contrast when the government began handing out telecom spectrum or oil and gas acreage, it had to face no such problem.

Commenting on the issue, leading corporate lawyer Hemant Sahai who has advised several central government ministries on public private partnerships said the new option is feasible. Reverting the mines to CIL would make little sense, if the idea is to bring them into production, he said.

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